November 2, 2017

The Real Lesson from the Balfour Declaration

by Stanley A. Weiss

WASHINGTON—One of the most famous letters in history was 67 words long, written on stationary from the Imperial Hotel in London, and delivered one hundred years ago today. Neither its author nor its recipient could have imagined the elation and the heartbreak it would cause for humanity over the following century, or how intractable the conflict spurred by its message, as captured in a Times of London headline at the time – “Palestine For The Jews!” – would remain to this day.

All anyone knew in November of was that the First World War was into its third year. British forces, with the help of Arab fighters, were on the verge of driving the Ottoman Turks out of Palestine and capturing Jerusalem, which was no accident: Britain had promised Arab leaders that if they helped defeat the Ottomans, London would support a unified Arab state across the Palestinian peninsula. Yet, Jewish leaders held out hope that Britain would make real a vision first articulated by Austrian writer Theodor Herzl in the face of growing anti-Semitism across Europe in 1896: that Judaism wasn’t just a religion, but a nationality – and that the Jewish people, scattered across the world, deserved to have their own state in their ancient ancestral land of Israel, which just happened to be the same land Arabs knew as Palestine.

With one stroke of a pen on November 2, 2017, Britain reneged on its promise to the Arabs and sided with the Jewish vision known as “Zionism.” In a letter from British Foreign Secretary Arthur James Balfour, to Lord Rothschild – the leading representative of the British Jewish community – the British Government pledged it would use its “best endeavors” to secure the creation of a Jewish homeland in Palestine. What came to be known as the “Balfour Declaration” didn’t create the state of Israel, but it set in motion the very forces that led to its creation in 1948. Meanwhile, to Arabs, it is seen as a declaration of war.

While many thoughtful analyses of the Balfour Declaration on its 100th anniversary have focused on the ways it transformed the political landscape, less known are the economic changes it brought about and the impact it had on creating the current divided economy between Israel and the Palestinians. Today, Balfour’s most enduring lesson may be that changes in politics follow from changes in economics – and not the other way around.

In short, Balfour opened the floodgates of Jewish capital. From 1917 to 1922, 300,000 more Jews fled their increasingly hostile home-countries to Palestine, representing nearly a third of the entire country. To put that in perspective, if we applied those numbers to the United States today, it would be as if 108 million immigrants suddenly arrived along America’s eastern seaboard over the next five years. Just imagine how America would react if all 108 million were Muslims.

Prominent Zionist leaders took advantage of the huge influx of people and capital enabled by Balfour to make a separate state of Israel an economic reality on the ground. In 1920, the Jewish labor union Histadrut was founded with the purpose of helping Jewish immigrants, organize workers, and develop plots of land bought for them by diaspora fundraisers. In 1922, future Israeli founding father David Ben-Gurion, who would become the first prime minister of Israel, took over as leader of Histadrut and turned it into something else entirely. It became the economic engine of Jewish nationhood.

Under Ben-Gurion, Histadrut began aggressively recruiting Jewish workers. By 1926, 70 percent of the Jewish workforce were union members, up from 50 percent in 1922. The body also took over responsibility for other aspects of Jewish life, from early education to healthcare, banking, defense and culture. Histadrut taught its members where to live, what to grow, and, eventually, how to fight.

Meanwhile, other Jewish diaspora organizations supplied the finances for immigrants to purchase land in Palestine. As historian Jacob Metzer has said, “These institutions provided the inputs needed for the development of a cohesive and self-reliant Jewish community, and consolidated its position as a viable economic entity.”

In short, the diaspora wrote the check, and Histadrut cashed it.

Ben-Gurion refurbished a labor union to build the Jewish economy, but he was largely playing a zero-sum game. The more the Jewish economy grew, the fewer opportunities there were for Palestinians. Arab workers offered cheap labor, but they were unorganized and ultimately no match for the wave of money, mechanical superiority, and Jewish immigration that swept through Palestine.

One hundred years after Balfour, that dynamic is still unfolding in the region today. Israel is a thriving, industrial economy. It exports more goods and services per year than most other developed nations. In a region plagued by youth unemployment, Israel’s unemployment rate stands at just 3.8 percent. In the West Bank and Gaza, however, Palestinian unemployment has stubbornly remained at 27 percent. In Gaza, it’s 42 percent.

For better or for worse, depending on which side of the Israeli border you were born, Ben-Gurion recognized that a self-sustaining economy was a prerequisite for statehood. It’s a lesson we’ve seen repeated over and over again the past half-century – from Spain’s work to modernize its economy in the 1960s, to South Korea’s sweeping economic reforms in the 60s and 70s, to Taiwan’s land reforms in the 1950s that helped create an entrepreneurial class that sparked an industrial revolution. Strong economies build strong states.

Conversely, weak economies will produce weak states. In Israel, there will not be a two-state solution as long as the Palestinian economy cannot stand on its own two feet. We only need to look as far as Gaza to see how a weak economy can become fodder for extremism, and why Israel will not—and never should—cede land to the Palestinians.

Maybe the real lesson of Balfour is that instead of talking about ways to divide the land, we need to first address the divided economy. Maybe the next 100 years needs to start with a shift towards investment in the Palestinian economy, so Israel and Palestine might finally have a shot at living side by side in peace.

As I’ve argued before, only business leaders can drive this shift, and there are several reasons why they might be able to get something done.

For one, it has become obvious that Israeli Prime Minister Benjamin Netanyahu and his coalition—increasingly ruled by the religious far-right—are neither willing nor able to take the necessary steps, at least without pressure. The political situation in the West Bank and Gaza does not look any more promising. While Fatah, the ruling party of the Palestinian Authority in the West Bank, and Hamas’s declared unity government has brought renewed hope of reconciliation, most figures behind the scenes are not holding their breath.

Second, there is already an established history of Palestinian and Israeli business leaders coming together to advocate for peace. In 2013, 200 Israeli and Palestinian business leaders—together representing 30% of their economies’ GDPs—began a coalition called Breaking the Impasse. The organization was meant to push Netanyahu and Palestinian Authority President Mahmoud Abbas to take a chance at peace, but imagine if these leaders spent the time between talks pressuring their respective governments to adopt incremental, common-sense reform? According to the Center for American Progress, Palestinians could add $1 billion to their GDP if allowed to simply operate businesses on land they already own in the West Bank, which is currently and completely under the control of Israel’s military.

Finally, there are growing indicators that the West Bank’s economy may be ready to take off, if given the chance. A nascent tech sector has grown stronger in recent years, unconstrained by checkpoints and other security measures that usually keep other Palestinians businesses from scaling up. It has grown from just 0.8 percent of Palestinian GDP in 2008 to over 11 percent today. I’ve written before about initiatives undertaken by people like my friend, entrepreneur Stef Wertheimer – whose industrial peace parks feature Jews and Palestinians living and working side by side to build both cooperation and viable industry. If given the proper infusion of capital by international and Israeli businesses, we might see the beginnings of a more resilient economy, with a thriving tech sector leading the way forward.

Chaim Weizmann, an architect of the Balfour Declaration and future Israeli President, once said, “There is a British proverb about the camel and the tent. At first, the camel sticks one leg in the tent, and eventually it slips into it.” To Weizmann, Balfour was the first leg in the tent—that first, crucial step towards a Jewish state.

One hundred years later, that proverb still rings true. When Palestinian men and women can envision a productive future for their children, when they can be proud of the industry they built, then peace will not be far behind.